Karnataka’s Renewable Energy Journey, the Rise of Peer-to-Peer Solar Trading, and Hygge Energy’s Impact

Autotrack spoke to Mr. Srinivasappa, Director (Technical), KERC about Solar rooftop and the benefits

Karnataka is often discussed today as a leader in renewable energy, particularly solar. But the state’s engagement with renewable energy is not a recent development. Could you take us through how this journey began and how Karnataka first established its reputation in the power sector?

Karnataka began generating electricity from renewables as early as 1902, when the first utility-scale hydroelectric power plant was established at Shivanasamudra with an installed capacity of about 6,000 hp. It supplied power to the Kolar Gold Fields. At the time, electricity was transmitted at voltage levels not yet achieved even in Europe or the USA. This early initiative was supported by the Mysore Maharajas, who were strong advocates of technological advancement. By 1905, electricity had reached Bangalore. For several decades afterwards, the state experienced surplus power generation and actively invited industries to set up operations, supported by this availability of electricity into the 19ar policy for 2014–2020 set a target of adding about 6,000 MW of solar capacity,  aligning with the central government’s national solar mission. Between 2013 and 2018, Karnataka announced plans for a solar park near Pavagada. Spread across 53 sq. km, the Pavagada Solar Park eventually reached about  2,050 MW of installed capacity, making it one of the state’s most significant renewable projects. Around 200 MW  is transmitted to Uttar Pradesh under an interstate power-sharing arrangement allocating roughly 10% of the generation to other states.

By the early 2020s, Karnataka had firmly established itself as a renewable energy leader. Up to 2021, it ranked first in renewable energy capacity and continues to lead in mini-hydel generation with around 940 MW installed.  Overall renewable capacity in the state now exceeds 20,000 MW, reflecting sustained policy direction and coordinated efforts by state agencies to meet defined targets.

While large solar parks have played an important role, attention in recent years has increasingly shifted towards rooftop solar. What potential does rooftop solar hold in Karnataka, and why has it become such an important focus area for policymakers?

As large-scale projects progressed steadily to build a strong base of installed capacity, attention shifted to rooftop solar, which also holds enormous potential in Karnataka due to high solar irradiation. It is the natural next step in expanding renewable energy adoption. Against this backdrop, Karnataka began exploring new models of energy usage and distribution, specifically peer-to-peer (P2P) energy trading. The idea is simple but transformative: a person who installs a solar rooftop system is not only able to use the electricity generated for personal consumption but also able to sell excess energy directly to neighbours and other consumers. In effect, energy becomes a tradeable commodity, allowing solar owners to recover their investment more efficiently and often earn better tariffs than those offered by traditional utility mechanisms.

Interestingly, Karnataka has been at the forefront of implementing peer-to-peer energy trading. Could you explain how the regulatory framework for this model came into place and how the concept moved from policy discussion to actual implementation?

Karnataka has taken the lead in P2P energy trading by introducing policies and regulations to enable it. The regulatory framework was put in place after extensive work by officials involved in drafting the policy. No other state has yet implemented a similarly robust mechanism for P2P energy transactions.

The regulations attracted the attention of industry innovator Hygge Energy, who, by engaging the Karnataka  Electricity Regulatory Commission (KERC) and Karnataka’s DISCOMs, enabled this P2P concept to evolve from policy to practice, and very encouraging and successful pi80s.

Despite that early advantage, the energy sector changed. What did Karnataka do to continue thriving in this evolving landscape?

Heavy reliance on a single source, i.e., hydroelectric power, due to Karnataka’s natural resources, eventually led to power shortages. This reinforced the need to diversify in the renewable energy sector. At the time of independence, India’s total installed capacity was 1,362 MW, of which Karnataka accounted for about 40 MW. As demand grew, the state’s familiarity with renewables encouraged more structured renewable energy policies, particularly for solar. By 2008 Karnataka had emerged as a policy leader, introducing dynamic state policies to promote renewable energy and becoming the first southern Indian state to install a utility-scale 3  MW solar plant near Bangalore. These policy directions remained consistent across successive governments. The renewable energy policy for 2009–2014, which was the first of its kind in the state and in South India, laid the foundation for further proliferation of renewables.

As technology advanced, the sollot projects followed.

This is where Hygge Energy began to play a critical role. Could you explain how they fit into this ecosystem and how their platform helps operationalize P2P solar trading?

Hygge Energy is a climate technology company that uses fintech for cleantech, creating digital platforms that connect renewable energy assets with modern energy markets. Operating as our technology provider, Hygge is a key player translating Karnataka’s P2P regulations into real-world systems by working with service providers — the feet on the ground — who install solar, support customers, and maintain infrastructure. In the platform model, 

these service providers can continue their relationship with customers even after installation, earning ongoing revenue as electricity transactions take place. For every unit of electricity traded, a small platform fee is generated,  part of which flows back to the service providers, ensuring sustained engagement and better service quality.

Beyond enabling energy trading itself, the model also appears to create a wider ecosystem of services and economic opportunities. What are some of the broader benefits that this system brings to consumers, service providers, and the energy market as a whole?

This model has several advantages. If a solar installation or smart meter is not working, service providers can respond quickly. The platform also helps them acquire new customers, as users can choose from approved providers with confidence. Beyond this, the entire system promotes renewable energy and opens the door to future offerings such as carbon credits. Hygge has also developed a carbon emission tracking system, which, once extended beyond domestic users to commercial and industrial customers, will enable participants to generate carbon credits through the same platform, hence creating yet another revenue stream.

The initiative has also attracted attention at the national level, particularly in the context of digital finance and emerging technologies. Can you tell us a little about that?

The broader impact of this policy framework has already been visible on national platforms. During the Global  Fintech Festival 2025, Karnataka was showcased as one of the few states adopting the Reserve Bank of India’s  (RBI) Central Bank Digital Currency (CBDC) framework. Out of only three live CBDC-based products demonstrated, one was Karnataka’s P2P solar rooftop trading system. CBDC, India’s legal digital currency, has become central to discussions around the country’s cryptocurrency and digital finance policy, and Karnataka’s energy trading model has emerged as a practical use case.

From a practical standpoint, how does the trading system actually function for users who want to buy or sell solar energy through the platform?

Operationally, the system works through Hygge’s mobile and Web app that connects buyers and sellers.  Participants can choose between long-term contracts, short-term contracts, or open-market transactions based on dynamic pricing. In the open market model, solar owners can offer a certain number of units at a chosen price,  while buyers place bids. An algorithm matches demand and supply, and determines a settlement price. Bids must be placed before 6 p.m. each day, after which the settlement price is announced, and participants have the option to accept or reject it. The next day, smart meters validate the actual energy transactions, and DISCOMs adjust the bills accordingly, reflecting how much power was sourced from solar and how much from the grid.

The pilot program is already underway. What has the response been so far, and how might this model influence the future of energy markets both within Karnataka and beyond?

The pilot phase began on 12^th August 2025, and the response has been phenomenal, largely because the model ensures benefits for all stakeholders. The officials involved in shaping the policy have become participants themselves, installing solar at their own homes and engaging with the platform.

Looking ahead, the model is already influencing other states. Uttar Pradesh has started its own pilot, while West  Bengal and Kerala have announced similar policies. However, Karnataka’s framework remains distinctive in its scale and integration of technology; no other region in the world has yet implemented a project of this exact nature. In terms of scale, Karnataka currently has over 700 MW of rooftop solar installed. 1 kW of rooftop solar typically generates around 4–5 units per day, depending on irradiation levels, which translates to roughly 4,000 to 5,000  units per MW. A significant portion of this energy is used for self-consumption, but the surplus, which was previously sent back to the grid, can now be traded through the P2P system, allowing owners to earn higher returns than traditional utility tariffs, which in the state are around ₹3.86 per unit for installations up to 10 kW.

From its early experiments with hydropower in 1902 to its current leadership in solar and digital energy trading,  Karnataka’s journey reflects a long-standing commitment to innovation in the power sector. With policy support and companies like Hygge Energy helping operationalize these ideas, the state is now shaping what could become a model for the rest of the country — and potentially for the world.